Senate unanimously passes bill to protect US airlines from EU ETS but elections will slow down progress
Mon 24 Sept 2012 – In the early hours of Saturday morning, the US Senate passed the bipartisan S. 1956 bill that gives power to the US Secretary of Transportation to prohibit the nation’s civil aircraft operators from participating in the EU Emissions Trading Scheme. A similar bill (H.R. 2594) has already passed through the House but because of Senate amendments the bill must now go back to the House for approval. However, both are now in recess until after the congressional and presidential elections on November 6 and the legislation, if passed, will then require presidential signature. The amendments call for a reassessment of prohibition in the event the EU amends its own Directive, an international agreement to address aircraft emissions is reached or if the United States enacts its own rules to address the issue. Trade body Airlines for America (A4A) commended the successful passage of the bill through the Senate while EU Climate Commissioner Connie Hedegaard welcomed the bill’s call for pursuance of a global deal but said the US would need to change its approach in ICAO.
“The Senate’s action today will help ensure that US air carriers and passengers will not be paying down European debt through this illegal tax and can instead be investing in creating jobs and stimulating our own economy,” said the Republican senator for South Dakota, John Thune, who sponsored the bill.
Co-sponsor Claire McCaskill, Democrat senator for Missouri, commented: “It’s refreshing to see strong, bipartisan support for the commonsense notion that Americans shouldn’t be forced to pay a European tax when flying in US airspace.”
Given their lobbying for the legislation, A4A unsurprisingly praised the two senators. “We commend Senators Thune and McCaskill for their leadership in passage of this crucial legislation that recognises this scheme is a breach of US sovereignty that actually limits our ability to build on our strong environmental record by investing in new and more fuel-efficient aircraft,” said its President and CEO Nicholas Calio.
Noting also the passing of the House bill last October (see article), Calio added: “Congress has spoken – US airlines should not be subjected to this illegal scheme that amounts to little more than a cash grab for the European Union as none of the funds collected are required to be used for environmental purposes.”
The legislation calls for the Secretary of Transportation to prohibit civil aircraft operators from participating in the EU emissions scheme if, after a public hearing, he or she deems it in the public interest to do so. The amendments permit the Secretary to reassess a prohibition in the event of an EU amendment to its scheme, an international agreement is adopted or the “enactment of a public law or issuance of a final rule after formal agency rulemaking, in the United States to address aircraft emissions”.
Under the bill, operators are to be held “harmless” from any adverse impact resulting from non-compliance with the EU ETS, such as over the non-payment of taxes and penalties. However, an amendment to the original bill stipulates that funds made available under the Airport and Airway Trust Fund or to the Department of Transportation or other Federal agency (such as the FAA) may not be used to settle any tax or penalty.
The bill also calls on the Secretary of Transportation, the FAA Administrator and appropriate US government officials to conduct international negotiations to pursue a worldwide approach to address aircraft emissions.
Although not commenting on the rest of the bill’s contents, EU Climate Action Commissioner Connie Hedegaard described the amendments as “interesting” on her Twitter account. In a later statement, she remarked: “The Senate bill calls for the US to go for a global deal to address aviation emissions. I agree. This is what the EU has always been fighting for. But it’s not enough to say you want it, you have to work hard to get it done.
“That means the US needs to change its approach in ICAO and show willingness to actually seal a meaningful global deal that will facilitate action. What’s global about an approach where each state regulates only its own airlines? What’s global about a model where a country would need to conclude numerous bilateral agreements before any meaningful action can be taken?”
Isaac Valero-Ladron, spokesman for Hedegaard, told GreenAir: “The bill conditions further action to the impact on US consumers, US environmental security and US foreign relations. These amendments suggest growing recognition of the urgent need to address international aviation emissions. All countries, including the US, should refocus their efforts on injecting positive ideas and forward-looking solutions into UN-led efforts to address growing aviation emissions.”
In a Senate committee hearing in June (see article), Transportation Secretary Ray LaHood said he and the Administration were firmly opposed to the inclusion of US aircraft operators into the EU ETS but held back from outright support for the prohibition bill. However, with overwhelming bipartisan support in Congress, the legislation is unlikely to be vetoed by the President should the Senate amendments be agreed in the House.
In theory, a reconciling of the House and Senate bills could come soon after the November elections, during the so-called ‘lame duck’ session, which occurs after the elections but before the newly elected President, congressmen and senators take office in January. If the House passes the Senate bill during this session, it could be sent to President Obama for his approval or veto. If for some reason it did not get passed by the House before January when the new Congress and new President takes office, then the process would start over with a new bill in each body. Newly elected presidents cannot take up ‘leftover’ bills from previous Congresses.
Whether the Administration would actually impose prohibition immediately after enactment, or would prefer to try to use it as negotiating leverage with the EU, remains unclear, said Annie Petsonk, legal counsel with the Environmental Defense Fund, which has campaigned in support of the EU ETS legislation.
However, she added: “It does put pressure on the US to negotiate a deal at ICAO in that the bill, if enacted, clearly escalates the dispute. But if you are an airline that opposes any limits on your global warming pollution, and you succeed in getting the Secretary to prohibit you from participating in the EU ETS, and you know that the Secretary is required to reassess the prohibition if there is an international agreement, you arguably have a perverse incentive to press the US not to reach an international agreement, for as long as the US doesn’t, you are insulated from any limits on your global warming pollution.”
To date, US airlines have complied “under protest” with the provisions of the EU Directive but will be pushing for early enactment since by 30 April next year they will be required to buy and surrender emissions permits to cover their 2012 shortfall. With the bill’s passage and the continuing decline in carbon prices – EU allowances are now trading at under €8 – some airlines may be holding back from purchasing their full requirement for now.